Economic Sustainability -- Challenges and Opportunities

Olathe’s economy is sustainable to the degree that its mix of activities minimizes the use of natural resources while maximizing the economic well-being and quality of life of its residents.

Economic sustainability requires a broad view of the interactions among economic, environmental and social systems with the goal of recapturing and recycling activity within the community. The successful attraction, incubation and retention of economic activities that interact with each other both functionally and geographically are the keys to a sustainable economy. This interaction requires that those activities be located near each other, and all economic activities must have access to both their employment bases and their ultimate markets. Given these needs, economic sustainability dictates a mix of land uses, with sufficient housing (prices of housing units as well number and types) to accommodate the work force.

To support the ability of the City of Olathe to continue to provide public services of the types and at the levels desired by City residents, economic development must also be sensitive to the revenue needs of the community. While some of these revenue-generating uses (like retail and lodging) are fiscally beneficial, their wage scales may not support their employees’ local housing costs. This is just one example of the need to balance the various policies of PlanOlathe. Thus, the community
will be challenged to resolve competing priorities as it pursues sustainable economic development within the framework established by the Comprehensive Plan.

Sustainable development requires that the City of Olathe maintain fiscal solvency by collecting revenues in amounts great enough to cover the costs of providing public services to its residents and businesses.

Today

Both Johnson County and Olathe are well positioned in the Kansas City regional economy. Both areas have diversified service-oriented economies that have experienced growth above that of the regional and national economies. Olathe, in particular, has experienced a surge in its employment. Johnson County has a high concentration of “white collar” industries, including Administrative, Professional and Technical, Finance and Insurance, Real Estate, and Educational Services. These are typically well paying jobs that draw an educated workforce and affluent demographic.

The economic growth in Olathe and Johnson County has translated into high population growth. While Johnson County is growing at nearly double the rate of the region, Olathe’s population grew three times faster than the region. This high growth has also been captured in residential construction.

Olathe and neighboring Overland Park captured 60 percent of the demand for residential construction in Johnson County. Olathe consistently captures 30 percent of total county residential construction, and issued an average of 1,200 new residential building permits per year from 2000 to 2008. Overland Park also issues approximately 1,230 permits per year, but builds considerably more attached and multifamily housing than Olathe. In Olathe, single-family homes comprise 76 percent of annual construction, on average. In Overland Park, attached and multifamily housing is 46 percent of new construction while single-family detached housing is 54 percent. Households in both Olathe and Johnson County are considerably more affluent and well-educated with median incomes and educational attainment levels well above those of the Kansas City Metropolitan Area. Olathe has a younger population with a median age below that of the Kansas City area.

Olathe is capturing the majority of its resident’s expenditures and is not experiencing major sales leakage to surrounding areas. The City of Olathe has continued to reinvest retail sales tax revenues in infrastructure, facilities and other quality of life improvements desired by
the community.

While it appears that Olathe has an adequate supply of retail space to serve its demand and attract an inflow of retails sales in traditional store categories, there is a significant over supply of retail/general commercial space. Much of this vacant or outdated retail space is located along Olathe’s older arterial roads, such as Santa Fe, Old Highway 56, and South Harrison Street, as well as Downtown Olathe. The City’s regional mall has transitioned from its primary anchor tenants to a mix of second
tier and off brand tenants. There are also some newer shopping centers that are not well positioned for retail capture given their size and location.

In the Future

PlanOlathe proposes a number of “Big Ideas” aimed at improving the quality of development in Olathe and to improve the community’s overall quality of life and attractiveness. From an economic perspective, all of these proposed policies and investments would help Olathe continue to compete for economic and residential growth in the Kansas City metropolitan area.

The Plan designates extensive areas for employment development along key corridors such as K- 10/College Boulevard and K-7, and the K-7/I-35 area. These areas are strategically located along major regional access roadways and are ideal for high visibility corporate sites. It is an important strategic decision to ensure sufficient land capacity in these locations in order to be competitive for regional employment growth.

Considering the areas of underperforming, obsolete, and vacant retail, PlanOlathe provides greater direction on the scale and type of retail uses sought for certain locations. Retail placement ensures that locations for new regional retail projects (e.g. a lifestyle center or “town center” project, or power centers) are reserved in the path of growth, surrounded by a large enough trade area (housing), or located such that they could capture sales leakage to adjacent communities, and that neighborhood or community centers are sized and located such that they can be market supported.

New policies suggest more aggressive commercial redevelopment strategies and additional public investment to direct retail and commercial growth to existing commercial centers, including Downtown. Demographics analysis has shown that Olathe can support approximately 125,000 square feet of new retail development alone within Downtown over the next 25 years.

PlanOlathe proposes extensive new areas of greenways, parks, and multi-use paths (bicycle and pedestrian). These types of natural and open space amenities have been shown to have positive impacts on real property values and public health. Land that is protected from development, for recreational use, habitat conservation, or natural resource protection such as water, has a tangible value that is hard to measure. One of the primary benefits of open space and conservation lands is increased quality of life. While the value of quality of life is not often quantified, quality of life has a direct link to economic development and community vitality that can be measured in other ways.

The Plan anticipates future transit service, consisting of a potential regional rail connection to other areas of the metro area, and expanded local transit service, potentially a bus rapid transit (BRT) system. Broadly, the economic benefits of transit improvements consist of increased mobility and labor force access; reduced congestion; travel time savings; air quality improvements; reduced fossil fuel consumption; reduced carbon and other tailpipe emissions; and improved quality of life flowing from these other benefits. Depending on the destinations and frequency of service, fixed rail transit has been demonstrated to have direct positive real estate development impacts. With more frequent service to more attractive destinations (e.g., major employment centers and shopping and entertainment districts) the development impacts are greater. The development impacts of rail transit generally occur within reasonable walking distance, ¼ to ½ mile, of a transit station.